London stock market edges to new high

London’s benchmark FTSE 100 index reached a fresh high Wednesday, but Europe’s main indices were lacklustre overall following recent rallies.

Elsewhere, a rally across Asia that welcomed in 2018 looked to have run out of steam with most markets slipping into the red on profit-taking, but Hong Kong rose for a 12th day as share prices in energy groups climbed against a backdrop of firming oil prices.

Wall Street again ended at record highs Tuesday, while optimism over the impact of President Donald Trump’s massive US tax cuts have helped fuel a global advance to record or multi-year peaks over the past month.

“You have to ask yourself what has changed really in these first six trading days of 2018, which has so materially driven (share) prices higher?” said Greg McKenna, market strategist at AxiTrader.

“For me, the rally is starting to feed on itself, or people’s fear of not participating in the upside, despite the fact that I also believe the global growth outlook and the impact of US tax cuts is a positive.”

On Wednesday, Hong Kong’s main stocks index continued its outstanding run by rising 0.2 percent — a 12th successive gain that puts it less than 900 points off its record high of 31,958.41 hit in October 2007.

Crude has more than doubled from its lows below $30 in early 2016, supported by an output freeze deal between OPEC and Russia and, recently, tensions in the oil-rich Middle East.

Market-watchers say unrest in key producer Iran could dent the country’s capacity, while others point out that any suppression of protests by Tehran could also lead Trump to reimpose export sanctions.

Oil futures have won support this week also from data showing a huge drop in US stockpiles as a big freeze in the northeast of the country fans demand for heating fuel.

The dollar meanwhile weakened against the yen a day after the Bank of Japan said it would cut back on its purchasing of bonds as part of its huge stimulus programme.

While not massive, the move brings Japan into line with other central banks. The greenback has struggled in recent months on expectations central banks are beginning to tighten monetary policy, closing the gap with the Federal Reserve.